Entre Computer Centers, the Vienna-based computer retailer, scored a victory last week in a long-running legal battle with some of its franchisees when a federal appeals court reversed most of a $4.9 million judgment against the company.
The Fourth Circuit Court of Appeals in Richmond overturned a $4 million verdict against the company for fraudulent misrepresentation in its dealings with the operators of Entre franchises in Kansas City and Omaha.
A three-judge panel agreed with Entre's contention that there was insufficient evidence to support the charge.
However, in a 2-1 ruling, the appeals court refused to set aside a $960,000 judgment against the computer company for breaching parts of its franchise agreement with the store owners.
The panel's majority said the record "contains substantial evidence to support the jury's verdict."
The appeal court's decision last Thursday has been long awaited by Entre, which supplies computer equipment to 200 franchises around the country, ever since an Alexandria jury assessed the company $4.9 million after a court trial in 1985.
The lawsuit was one of more than a dozen filed against the company by disgruntled franchisees who claim that the company made misrepresentations and breached contracts to help them get their stores started.
While Entre has settled a number of the lawsuits and has worked to patch up relations with other franchisees, the litigation has been a continuing drain on the company as it seeks to revive its fortunes in the wake of the 1986 computer industry slump.
The company has adamantly denied the charges in the suits and attributed the litigation to people seeking to blame Entre for their own failure in business.
Neither company lawyers nor the lawyer for the franchisees were available to comment last week on the appeals court ruling.
The dispute in question last week began in 1984, when Entre reached franchise agreements with Gary J. Fox and David H. McMullen to operate Entre stores in Kansas City, Mo., and Omaha, Neb.
The stores closed in 1985 because of financial difficulties, but the owners charged in a lawsuit that Entre was to blame for the problems because it overcharged the two for inventory, forced them to purchase obsolete equipment, and unexpectedly canceled certain product lines.
The two also contended that Entre breached franchise agreement provisions to help them select a store site, provide a qualified representative to help the store, and to act in good faith, as well as fraudulently misrepresented the terms of the contract.
Entre denied the fraud and breach-of-contract charges, and its lawyers said bad management led to the financial problems at the two stores.
After a trial in federal court in Alexandria, a jury awarded $960,539 for breach of contract and $4 million for fraudulent misrepresentation. U.S. District Court Judge James C. Cacheris denied the company's subsequent motions to put aside the verdicts or set a new trial.